Available estimates of capital flight from Nigeria have several important limitations. This study takes cognizance of these limitations in estimating and subsequent analysis of trends of capital flight flows in Nigeria for the periods 1970 -2004 using the residual method of estimation, including necessary adjustments to account for the influence of trade faking and exchange rates movements. The study further seeks to verify if capital flight is indeed an important concern to economic management in Nigeria by exploring various economic issues that existing body of theoretical and empirical literature had linked to capital flight. For most of the periods, capital flight estimates had positive sign, indicating that residents consistently took capital out of Nigeria. The study further documented that trade faking is an important means through which capital flight is effected in Nigeria, with evidences that confirmed the existence of financial revolving door relationship between capital flight and external indebtedness in Nigeria. The study emphasized the need for decisive policies to strengthen macroeconomic management and macro-organizational fundamentals. A rather flexible trade and exchange regimes that result in a lowering down of tariff duties, and a more market determined exchange rates, are likely to wipe out the incentives for fabrication of traded values of exports and imports.